What to do when things go wrong with your ERP implementation

Dos

• Know your contract!
  • Firstly, familiarise yourself with your contract. The provisions have been carefully drafted and are there to be used. There is no substitute for reading the contract and no need to shy away from the contract for fear of ‘going contractual’: the contract provides the parties with a structure under which you can address issues.
  • Know the implementation and delay process: your contract should contain provisions dealing with the implementation phase and remedies in the event that you run into delays on your implementation programme.
  • Know the governance structure: knowing which stakeholders should be involved in governing your project will be important, so make sure you not only know the governance structure set out in the contract but actually use it by setting up the relevant boards and terms of reference.
  • Know the dispute resolution process: It’s important to know where issues should be escalated to if needed. Having a broad understanding of the dispute resolution procedure, and how that may feed into other remedies, is also important.
  • Know your remedies: liquidated damages (e.g. Delay Payments), rectification plans, and termination rights may all be in your remedy arsenal – be sure to know what you have available to you.
• Identify issues as soon as possible
  • Quite often issues identified early are more easily addressed and resolved, allowing the parties to move on.
  • If issues are left to fester, it can lead to a breakdown in the relationship between the parties, with parties feeling entrenched in their position.
• Assess the severity of the delay/breach and the reasons for it:
  • Do consider if the delay is on your organisation’s critical path and the likely losses you will incur flowing from that delay e.g. do you have to keep your legacy system in place for longer than expected?
  • Assess the reasons for the delay/breach. Conducting a root cause analysis as to how and why the delay/breach has arisen is a critical exercise.
• Seek legal advice as appropriate
  • Seeking legal advice early can help to identify the relevant contractual mechanisms and can assist with analysing and assessing the issues.
• Respond accordingly:
  • Do apply the relevant provisions of the contract in a manner that is appropriate.
  • Do know when to escalate the matter if it is not being resolved.
• Reaching a Settlement:
  • If you choose to reach a settlement, do make sure that you take legal advice on the merits of the settlement and so that it is recorded properly. Some of the factors that should be considered are:
    • the strength of the claim;
    • the inherent uncertainties and expense of litigation;
    • the benefits of settling the case rather than disputing it.

Don’ts

• Don’t use emotive or unhelpful language:
  • Using aggressive or emotive language can potentially be unhelpful to resolving a problem. The desired result is to first and foremost, resolve the problem. All parties should act in a collaborative manner to find a solution to the problem.
• Don’t waive your rights:
  • Don’t inadvertently lose your rights to any remedy you may be entitled to either under your contract or otherwise, through your actions (or inaction). If the delay/breach is not resolved, you may wish to rely upon your rights and remedies in the contract.
• Don’t inadvertently accept the breach/delay through your conduct
  • Agreeing to re-plan project timescales without regard to your contractual remedies may inadvertently mean you ‘accept’ (or acquiesce) to the breach/delay. This means that you cannot revisit the contractual remedies that were potentially available to you at a later date.
  • Contract managers will need to ensure that all of the project team are aware of these dangers and provide guidance and training accordingly.
• Don’t agree to settle any dispute without seeking legal advice:
  • Make sure it is clear who within your organisation has the authority to settle disputes.
  • Legal advice should be sought when seeking to settle disputes.

This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any of the issues raised in this blog, please contact us today by telephone or email enquiries@sharpepritchard.co.uk.